Stock trading strategies. Entry points

In most cases, I appear to my readers as a medium-term investor. But most of my trading practice is devoted to fairly tough speculation on rules intraday trading. Over the years and the growth of the portfolio in absolute terms, the size of its speculative part has decreased. Currently, about 90% of the funds are allocated for investments in Russian and foreign shares, and the rest for speculation in the Russian derivatives market.

Universal rules for intraday trading

I am often asked why I trade in the derivatives market? At one time it just became more convenient for me. If I had to make a decision on where to trade speculatively at the current moment, I don’t even know what I would choose, since now there are opportunities to take out loans on stocks more than on some futures, and not worry about expiration interfering with your plans. Sometimes I think, maybe I should give up the old stuff on the stock one? But I’ll hold off for now, because I haven’t studied everything in the derivatives market yet, and I don’t want to spread myself thin.

However, my strategy according to the rules of intraday trading on the derivatives market will celebrate its fifth anniversary this year in November. The results are already quite good, I don’t like to announce them as official, since there were long breaks in trading in futures contracts. But, nevertheless, if you do not throw these gaps out of the statistics, then the profitability will rise to 120% per annum with maximum drawdowns of up to 40%.

Very often, when working in the derivatives market, I do not enter into a transaction beyond one day. I think even if you have not appreciated the results of my practice, I understand that they are modest for the market I have chosen, then my rules for intraday trading on the derivatives market will be useful to you, since they can be adapted to any time interval and to any exchange instruments.

So, let's take it in order.

Elementary analysis

For novice traders, it makes the most sense to use available technical analysis tools for market analysis. Although there is still debate in the world about its effectiveness, mathematical approaches to technical analysis are used quite successfully in both stock and foreign exchange markets. A personal assessment of such tools can only be given after application in practice.

The basic principles of technical analysis of the cryptocurrency market are presented in the analytics of price movements on charts using technical analysis indicators. This technique is based on comparing a huge number of factors influencing cryptocurrency quotes, as a result linking them with various indicators, for example, moving averages, stochastic indicator, RSI, etc. The use of technical analysis indicators makes it possible to predict the further movement of prices for cryptocurrencies, which ultimately will enable the trader to enter into profitable transactions. We will write in detail about the ways and methods of using technical indicators in one of our next articles in the “Trading” section.

The most commonly used technical analysis indicators are moving averages (or MA for short). MA - displays the average price of an asset for a certain period of time, which is specified in the indicator settings. When quotes increase or decrease, the position and slope of the moving average indicator lines change, indicating the trend of currency exchange rate movements. A simplified rule for reading the readings of this indicator states that if the price is above the average, there is a high probability of an increasing trend, and if the current position of the currency value is below the averaging line, most likely, the price will change downward in the near future.

Elementary analysis can be based not only on moving averages, but also on patterns of changes in cryptocurrency prices, which can be determined using so-called Japanese candles. This type of graph allows you to successfully monitor current trends. We strongly recommend that you consider the current market trend when working on your cryptocurrency exchange trading strategy. A trend, or as it is also called a trend, can be upward, downward or sideways. The key to success is working according to the trend. If the trend is upward, look for the opportunity to conclude purchase transactions; if the trend is downward, then sell. If the trend is sideways (price movement in a sideways channel), look for the boundaries of this channel and trade from the upper boundary of the channel downwards (sell transactions), and from the lower boundary upwards (buy transactions). When breaking through the lower or upper border of the side channel, trade in the direction of the breakout.

A good example to illustrate the use of this tool is patterns. They can be called a convolution of the part of the graph that is examined when moving from a short-term to a longer time period. The result is a high-quality display of turning points in changes in quotes, which makes it possible to predict with a high degree of probability the direction of the changing exchange rate of cryptocurrencies.

How do I trade intraday?

According to the classics of technical analysis. The advantage of this method is that any time I would not have the terminal open, I can see the idea and not be tied to the monitor.

The downside, especially for beginners, is that it will be difficult to deal with the subjective aspect of this method. This requires experience!

Cryptocurrency trading: choosing the right strategy

01/16/2019 Guest materials

#trading

Cryptocurrency attracts many people who see it as a tool for earning extra money. However, beginners often enter exchanges and trade intuitively, which leads to the depletion of capital in the first days. In a special article for ForkLog magazine, Kamilya Arslanova, CEO of the Arbidex inter-exchange arbitrage platform, reviewed the main and most profitable trading strategies.

The main advantage of all the strategies described below is high profitability and minimal risks. It is important to understand that it is impossible to trade in the cryptocurrency environment without any risk - there is always the possibility of a sudden collapse in the price of digital assets.

Scalping

This strategy can be called classic. It was first used in Forex, and is still a favorite among amateurs and professionals.

Its essence is as follows: a trader enters into a large number of transactions within a short time, and then closes them after a few minutes (in some cases, seconds).

At its core, the strategy is simple, but it is not recommended to invest a significant amount in scalping, since cryptocurrencies can collapse in price and bankrupt the trader.

This strategy can be used on any cryptocurrency pair. For example, you buy 10 Litecoin for $30. When the price reaches $35, you immediately sell all Litecoins for a profit of $50 (excluding trading fees). However, constant monitoring is required, plus confidence that this particular coin will grow in the short term.

There are several types of scalping:

Glass. It depends on the trader's ability to identify the imbalance between supply and demand and thus predict which cryptocurrency will rise.
Impulse, which consists of changes in quotes due to external impulses and news. The trader must be able to evaluate this news.
Hybrid scalping is the ability to evaluate all factors affecting the price of a cryptocurrency pair.

Creating a crypto portfolio

This complex cryptocurrency trading strategy is based on assessing the state of the cryptocurrency market. To use it effectively, it is necessary not only to monitor the situation on the cryptocurrency market, but also to take into account many fundamental factors. Moreover, it is advisable for an investor to monitor the macroeconomic situation in the world.

How it works? The trader forms a portfolio of several promising and, in his opinion, undervalued coins. The ideal situation would be to create a balanced portfolio of cryptocurrencies, the value of which will not rise and fall excessively. In this case, a beta-neutral portfolio in relation to Bitcoin may be optimal, where half of the coins directly correlate with BTC and grow as it strengthens, and the second half, on the contrary, grows when the price of “digital gold” falls.

Proper rebalancing of such a portfolio will generate income regardless of the general trend in the market. However, keep in mind that assets may correlate differently with Bitcoin over different time periods.

HODL

Although other strategies may be used in the short term, HODL, or buy and hold, is the most effective in the long term.

Its essence is extremely simple: the trader buys only selected crypto-assets and stores them in his wallet until they significantly increase in price.

There are many examples to support this strategy: When the cryptocurrency market peaked at the end of 2020, the prices of many assets skyrocketed. This trend continued for some time, allowing smart players to make significant profits. Those who once bought Bitcoin for $10 were able to reach $20,000 for 1 BTC.

However, to follow this strategy, you must not only carefully study the market, but also have nerves of steel. The fact is that any cryptocurrency can significantly adjust in price, causing a strong desire to get rid of cryptocurrencies and return their fiat money.

As part of this strategy, you need to select a threshold - a price below which you are not willing to hold the asset, and after the exchange rate reaches this value, the asset must be sold.